- The payout to creditors on FTX starts with the $1.9B cut.
- KYC and onboarding should be completed by Aug 15, 2025 by eligible claimants.
- In 49 restricted jurisdictions, there is still legal controversy on payouts.
The FTX Trading Ltd. and the FTX Recovery Trust have recently stated to initiate the next schedule of cash distributions to the eligible creditors, which are likely to start by around September 30, 2025. This development is after a massive cut of 1.9 billion dollars in the disputed claims reserve, which was court-approved, further opening more funds to be distributed.
Source -prnews wire press release
FTX was allowed to lower its disputed claims reserve from $6.5 billion to 4.3 billion by the D.B.C (Delaware Bankruptcy Court).This release totalling $1.9 billion will be distributed to holders of permitted claims, such as Class 5 Customer Entitlement Claims, Class 6 General Unsecured Claims and Convenience Claims allowed since earlier releases.
Creditor Verification and Distribution Process
Payment will only be provided to claimants who meet the pre-distribution requirements, as defined by FTX. Such requirements entail Know Your Customer (KYC) verification, furnishing the required tax documentation, and onboarding with some of the approved distribution service providers, including BitGo, Kraken, and Payoneer. The process of claim transfers should be done and registered before August 15.
This distribution aims to further the bankruptcy restructuring process.Prior distributions have reimbursed creditors for approximately $6.2 billion dollars after the collapse due to liquidity issues in November 2022.The latest action indicates further steps towards the resolution of the insolvency of FTX.
Global Jurisdiction Restrictions and Dispute
One of the legal dilemmas is related to the settlement of claims in some foreign jurisdictions. FTX has made an application before the court to approve a Restricted Jurisdiction Procedure in 49 countries, including China, Russia, and Pakistan. Until an omnibus hearing, scheduled in July of 2025, this procedure will authorize or not authorize the making of distributions to the claimants who are in these restricted jurisdictions.
Source – X
Sunil Kavuri on behalf of a substantial number of creditors through the social platform X, mentioned the significance of this hearing, particularly to the people within the confinements of such territories. In the meantime, a Chinese creditor on behalf of more than 300 users contested this plan by discouraging the punishment of users based on mere regulatory assumptions and pointing out other legal possibilities using Hong Kong.
The claims of the restricted jurisdictions are about 800 million dollars, of which China has 82 percent of these claims, which makes the fair sharing of funds difficult.
The case highlights the tricky legal environment that FTX has to operate in so that it can make compliant and fair payments that comply with international regulatory issues.
Court-Approved Strategy Limits Crypto Exposure
FTX Recovery Trust emphasizes the risk of volatility: as an alternative to transferring cryptocurrencies directly, they intend to distribute cash equivalents. In this plan, the creditors will be shielded against the unpredictability that is characteristic of the digital asset market and the procedure will be equated with the conventional bankruptcy processes. Institutional custodians like Kraken and BitGo should be used to improve compliance and supervision in allocation of funds.
The Trust argued that its decision to decrease the amount of the disputed claims reserve and focus on cash-equivalents is one of the significant milestones on the way to transparency and the organization of the creditor repayment processes at FTX.
